What It Takes to Be a Great Employer

One of the primary definitions of the word “engagement” is “a hostile encounter; a battle.” Another is “a specific, often limited period of employment.”

In the corporate world, however, engagement has come to signify just the opposite: some blend of an employee’s commitment, passion, focus, motivation, morale and job satisfaction.

It’s what every company wants, but few get.

Even in the absence of a fixed definition, more than 100 studies have now demonstrated a strong relationship between employee engagement and organizational performance. For example, a Towers Perrin study conducted in 2007-2008 among 90,000 employees in 18 countries found that companies with the most engaged employees had a 19 percent increase in operating income during the previous year, while those with the lowest levels had a 32 percent decline.

The study also found that only 20 percent of all employees were fully engaged. Forty percent are “enrolled,” meaning capable but not fully committed, and 40 percent were disenchanted and disengaged. That’s consistent with a number of other studies, including Gallup’s.

So what most influences employee engagement?

In our work with several dozen Fortune 500 companies, we’ve come to believe the holy grail is the degree to which employers actively invest in meeting the multidimensional needs of their employees. Above all else, that’s what frees, fuels and inspires people to bring the best of themselves to work every day.

The primary value most employers offer employees is money. Too often, it’s barely enough to survive. Five million Americans earn the minimum wage of $7.25 an hour. For a 40 hour work week, that comes out to $15,080 a year. The poverty line in the U.S. is $22,050 for a family of four.

But even paying employees far higher salaries is no guarantee they’ll be engaged so long as their other needs aren’t met.

Our most basic needs, beyond survival, are in the physical domain. Among the companies with whom we’ve worked, Google does far and away the best job of investing in the health and well-being of their employees. Google provides them terrific food at no cost, fully equipped gyms, low-cost massages, napping pods, and on-site medical care.

How crazy is it that companies are willing to invest in preventative maintenance on fixed assets such as their machinery, but typically won’t make a comparable investment to enhance and sustain the health and well-being of their employees?

The second core need all of us share is to feel emotionally secure — meaning valued, recognized, and appreciated. Less than 40 percent of employees worldwide feel their managers are genuinely interested in their well-being. Only one out of ten employees feel they’re treated as vital corporate assets.

The more our values feel at risk, the more we become preoccupied with defending and restoring them, and the less energy we have left to generate value for our companies.

The vast majority of employers fail to recognize a simple and immutable truth: how people feel at any given moment profoundly influences how they perform.

Think about how you feel when you’re performing at your best. Nearly all the adjectives most of us think of — happy, positive, confident, optimistic — reflect a high quantity and a high quality of energy. Leaders ought to be evaluated, in large part, on the degree to which they evoke those feelings in those they lead.

Our third core need is for self-expression — the opportunity to use our unique skills and talents and to figure out for ourselves how best to get our work accomplished. Instead, most employers tell their employees when to come to work, when to leave, and how they’re expected to work. It’s a parent-child dynamic.

Treated like children, many employees unconsciously adopt the role to which they’ve been consigned. Feeling disempowered, they lose the confidence and the will to take real initiative or to think independently.

Empower and trust employees to get their work done, and what you’re likely to get back is appreciation, higher motivation and greater commitment. If you’re a leader, why wouldn’t you measure your employees by the value they generate, rather than by the number of hours they work, or how they choose to get it done?

That’s the mission of Cali Ressler and Jody Thomson, the two women who created the Results Only Work Environment (ROWE), in which employees design their own work days and are evaluated solely on their results. Ressler and Thomson instituted it first at the home office of Best Buy, their own former employer and they’ve since brought it to Gap Outlet, and several other companies with impressive results.

The fourth and final core human need is for significance. Once our survival needs are met, most of us long to feel that what we’re doing truly matters.

Most large companies today have a lofty mission and vision statement, and an equally noble set of core values. But what gets written on a piece of paper counts for very little. What really inspires us are leaders who visibly, palpably, credibly and consistently stand for something beyond profit, and who give us the opportunity to get behind a meaningful mission.

That doesn’t require that a company be in the business of curing cancer or solving global warming (although that certainly helps). Zappos is an example of a company that began with something as prosaic as selling shoes on line. But through a combination of a fierce commitment to great customer service, and to treating its own employees equally well, CEO Tony Hsieh and his team have created a company with a powerful sense of mission and high level of employee passion and loyalty.

Mark these words: The companies that make a paradigm shift from seeking to get more out of their people, to investing instead in meeting their core needs, will build huge competitive advantage in the demanding years ahead.